Number
170935
Version
SUBSTITUTE 1
Reference
Sponsor
ALD. KOVAC
Title
A substitute charter ordinance relating to annual valuations of assets and liabilities of the employes’ retirement system.
Sections
36-15-15 am
Analysis
This charter ordinance amends provisions relating to annual valuations of assets and liabilities of the employes’ retirement system as follows:
1. For purposes of annual valuations, the retirement system’s actuary shall employ the individual entry-age normal actuarial cost method rather than the current projected unit credit actuarial cost method.
2. The actuary shall apply a closed layered amortization method with amortization payments for each base increasing by 2% per year. The outstanding balance of the unfunded actuarial accrued liability as of January 1, 2018, shall be amortized over a 25-year period. At each subsequent valuation date, any changes to the unfunded actuarial accrued liability arising from actuarial gains or losses shall be amortized over a fixed 15-year period, and any changes to the unfunded actuarial accrued liability arising from changes in assumptions, methods or plan provisions shall be amortized over a fixed 25-year period.
Body
The Mayor and Common Council of the City of Milwaukee do ordain as follows:
Part 1. Section 35-15-a and be of the charter is amended to read:
36-15. Administration.
15. ANNUAL VALUATIONS. a. On the basis of such tables as the board shall adopt, the actuary shall make an annual valuation of the assets and liabilities of the funds of the retirement system. This annual valuation shall comply with Actuarial Standards of Practice and shall contain a certification from the board's actuary to that effect. For the purposes of the annual valuation, the actuary shall employ the [[projected unit credit]] >>individual entry-age normal<< actuarial cost method.
b. Beginning with the valuation that determines employer contributions due and payable January 31, 2011, the actuary shall employ a 5-year asset smoothing period [[and an asset valuation corridor that allows for a variation between the market value and actuarial value of assets of 20%]]. The actuary shall calculate amortization of unfunded liability based on a level percentage of payroll amortization. The actuary shall apply a closed >>layered<< amortization method [[to a 24-year amortization period, until the amortization period is reduced to the expected future working lifetime of the active population, calculated separately for police, fire and general city members]] >>with amortization payments for each base increasing by 2% per year. The outstanding balance of the unfunded actuarial accrued liability as of January 1, 2018, shall be amortized over a fixed 25-year period. At each subsequent valuation date, any changes to the unfunded actuarial accrued liability arising from actuarial gains or losses shall be amortized over a fixed 15-year period, and any changes to the unfunded actuarial accrued liability arising from changes in assumptions, methods or plan provisions shall be amortized over a fixed 25-year period<<. Beginning with the valuation that determines employer contributions due and payable January 31, 2011, the board shall provide a copy of the final annual valuation, as certified by the board, to the mayor and the common council no later than August 15. No changes shall be made to this paragraph without an affirmative vote of the board of at least 6 of its members, and written certification from the board's actuary that such changes comply with Actuarial Standards of Practice.
Part 2. This is a charter ordinance and shall take effect 60 days after its passage and publication, unless within such 60 days a referendum petition is filed as provided in s. 66.0101(5), Wis. Stats., in which event this ordinance shall not take effect until submitted to a referendum and approved by a majority of the electors voting thereon.
LRB
APPROVED AS TO FORM
____________________________
Legislative Reference Bureau
Date: ______________________
Attorney
IT IS OUR OPINION THAT THE ORDINANCE
IS LEGAL AND ENFORCEABLE
____________________________
Office of the City Attorney
Date: ______________________
Requestor
Drafter
LRB170224-2
Teodros W. Medhin
11/2/2017